Energy

After years of technical problems and delays with a technology that would capture carbon dioxide emissions from coal, Southern Company announced that it will run its Kemper County plant on natural gas.

Utility conglomerate Southern Company has pulled the plug on a struggling “clean coal” power plant in Mississippi after state regulators balked at the project’s ballooning price tag.

The Kemper County plant was designed to burn gas extracted from lignite, a cheap grade of coal that’s readily available in Mississippi. The process would capture about two-thirds of the planet-warming carbon dioxide emissions of a normal coal-fired power plant. But the project has been plagued by technical problems and delays that have driven its costs up to $7.5 billion — more than double its original estimate.

The state Public Service Commission told Southern subsidiary Mississippi Power last week that it opposed any further rate increases to cover the cost of the plant. And Wednesday, the company announced it was “immediately suspending start-up and operations activities” on the clean coal process and would burn conventional natural gas instead.

"We believe this decision is in the best interests of our employees, customers, investors, and all other stakeholders," Southern president Thomas Fanning said in a statement announcing the decision.

The move is a blow to hopes that power plants can keep burning cheap, abundant coal while sharply reducing the emissions that are driving global warming. And it’s likely the end of the line for the type of process at work at Kemper, which used a high temperature, high-pressure system to remove CO2, said David Schlissel, director of resource planning at the Cleveland-based Institute for Energy Economics and Financial Analysis.

“They wanted a product that thy could take around the world and sell to other countries, and they would make the profit and ratepayers would bear the risk,” said Schlissel, who testified against the project on behalf of its opponents. “It didn’t work out that way.”

Mississippi Power tentatively started running generators on the lignite gasification process last fall, but started running into trouble because of a buildup of coal ash. In early June, Southern Company told investors it will need to redesign and replace a key piece of gear partly because of those coal ash issues, adding another $164 million to the tab.

Two other North American power plants, in Saskatchewan and in Texas, are recapturing CO2 from smokestack emissions after combustion. The jury is still out on how well that process works, Schlissel said, but the costs are sharply higher.

The 582-megawatt Kemper plant has already been running on gas for much of the past three years, and the PSC said it wanted to see it continue as a gas-burning plant. Mississippi Power customers have already seen their bills go up 15 percent as a result of the project — and in a statement last week, the agency said it wants to see rates go down, not up, in an eventual settlement with the company.

Atlanta-based Southern is also grappling with billions in overruns and years of delays at another major project, the construction of two new nuclear reactors at a power plant in Georgia. Those overruns drove reactor builder Westinghouse into bankruptcy court and badly dented the balance sheet of its corporate parent Toshiba, while leaving Southern trying to work out a plan to complete the job.